Review for Economic Fundamentals Test 2

What is the term for the human effort used in the production of goods and services?

• capital

• labor

• scarcity

• Knowledge

Elijah's Diner is inspected by government agencies on a regular basis to ensure it is obeying health and food safety regulations. What economic effect does this have on Elijah's Diner?

• The price of food is typically lower because the regulations force Elijah's Diner to use cheaper ingredients

• Elijah's Diner charges higher prices to cover the costs of the time and resources used in meeting the regulations

• More food is produced because the regulations make Elijah's Diner more productive.

• Regulations don't affect Elijah's Diner.

When constructing a new office building, Skyline Corp. acquires a plot of land, leases multiple bulldozers, and employs 300 builders and 40 supervisors. Skyline Corp. exemplifies

• Labor

• Capital

• Land

• Entrepreneurship

If Builders Inc. invests in new machinery, leases office space, and employs 300 engineers and 20 supervisors, then the new machinery represents...

• Labor

• Capital

• Land

• Entrepreneurship

John agrees to exchange his vintage comic book for Lisa’s rare vinyl record, and Lisa agrees. Assuming both items are in excellent condition, we can conclude that

• neither party has gained because the exchange was unfair

• John got the better deal because comic books are more valuable.

• both individuals have benefited because the trade was voluntary and fair

• Lisa is now more satisfied than John.

A production possibilities curve shows

• choices a person makes between items

• the technological changes that improve production

• all of society’s resources

• the combination of goods that can be produced with a set of resources

When Scarlett's retail store dedicates more floor space to selling a new product, what is their opportunity cost?

• the chance to sell an old product in that space

• the products that are placed in the new space

• the income generated from selling the new product

• the money lost while setting up the new space

Sophia is starting a small bakery business and is producing chocolate chip cookies. In her production process, which represents the factor of capital?

• the worker who decorates the cookies

• the wheat used to make the cookies

• the oven used to bake the cookies

• the retailer who sells the cookies

A good example of the effect of EDUCATION on INCOME would be...

• Employees who learn to perform high risk jobs always get paid more.

• people with college degrees usually earn more than those with less education

• only job applicants with college degrees get job interviews

• workers who learn to make high demand products are well paid.

What is the term for an economic system where the government makes almost all the economic decisions?

• Mixed

• Command

• market

• Traditional